Irish firms will need 400 million euros a year in subsidies to help them through Brexit

London Mercury - Monday 19th June, 2017

IBEC suggested the funding should come from the EU and the government

The body believes Irish companies might need to be subsidized to the tune of 300-400 million euros per year

The subsidies will help Irish companies trade through the disruption

DUBLIN, Ireland - With the contentious Brexit negotiations beginning in Brussels, the business group IBEC has warned that Irish firms would be in the need of 300-400 million euros a year, in subsidies, to help them trade through the disruption that Brexit will leave.

According to IBEC, that has suggested that the funding should come from the EU and the Government, has pointed out that the resources required will be in the region of 5 percent of the value of current indigenous annual export sales to the U.K.

It added that up to 400 million euros may be needed annually, in a worst case scenario.

The report by IBEC has come immediately after the new Taoiseach Leo Varadkar announced he is to meet the British Prime Minister Theresa May in Downing Street on Monday.

Varadkar reportedly said, "I am looking forward to travelling to Downing Street today to meet the British Prime Minister, Theresa May. I want to renew the close bond and strong relations that exist between Ireland and the United Kingdom. Among other things, we will discuss Northern Ireland and the need to re-establish devolved Government, and Brexit, focusing on how we can avoid any adverse impact on the rights and freedoms of our citizens, on trade and the economy."

According to the employers’ body - the funding would be to help Irish companies innovate, diversify into new markets, train staff and invest for the future.

The body said that it recognises that, given the size of our export/import relationship with Britain, under its proposal the supports Ireland would get from the EU would be greater than other member states.

However, Fergal O’Brien, IBEC’s director of policy, pointed out in a statement that “the situation is not of our making and we should not be economically challenged as a result of it.”

On Monday, IBEC was to launch a comprehensive set of proposals to progress EU-U.K. negotiations and limit the negative impact of Brexit on business and the wider economy.

The body has said that the approach to the negotiations should target a smooth exit, comprehensive transitional arrangements, the closest possible future relationship, and the unique Irish challenges.

It further added that it believes the recent election in Britain has opened up possibilities, not least a greater chance that it will remain in the customs union.

IBEC chief executive Danny McCoy said, “Any deal must recognise the unique economic and political challenge for Ireland and include a range of specific measures to address these. An early focus on avoiding a hard border with Northern Ireland is vital, but the Irish approach must also be informed by the greater economic importance of the east-west Irish-British trading relationship. Across both trade and investments, the outcome of negotiations must not disadvantage Ireland.”

Amongst the other recommendation, made by the business group, IBEC are trade, customs, the single market and regulation, and the common travel area and the all-island economy.

IBEC said in a statement, “It is in everyone's overwhelming economic interest for the U.K. to remain in the EU customs union, but if not, close cooperation and simplified customs procedures will be needed. An agreement on trade and customs on the island of Ireland should be framed in the first phase of talks. The U.K. and EU should also agree a common transit system early in the negotiations.”

IBEC pointed out that there are certain sectors of the economy in the country, which are particularly exposed by Brexit.

The employers’ body said, “These are sectors that are typically jobs-intensive and are located in rural parts of the country.”

It also pointed out that, in the Agri-food sector, more than 4.3 billion euros annually is spent on purchases from primary producers. It said that a further 2.1 billion euros is spent on compensation of employees in the sector who primarily live in rural locations.

It said, “There are 230,000 people employed directly and indirectly in the agri-food supply chain and 40 percent of its exports (4.4 billion euros) go to the U.K. In the region of 46,000 jobs in the sector (2.3 percent of total employment in the economy) are linked directly or indirectly to exports to the U.K.”

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